This week the property owners and management companies who have vacation rental permits in the city of Rancho Mirage were sent an email regarding T.O.T. (transient occupancy tax). Besides the deadlines for tax submission, the email also reminded owners of the consequences of tax fraud which some owners may not realize they are doing right now.

Long term vacation rentals are generally understood to be rentals of one month or longer. There may be variances in each city’s definition of the length of these rentals; for some cities it is twenty-eight nights, some thirty and others thirty-one. You should know that booking a reservation for a one month stay to avoid T.O.T. or to satisfy your HOA (home owners association) rules on length of renter stays, is consider fraud and a felony. In other words, if you receive an inquiry for a week, three nights, or even one night short of the minimum nights required by your city as a long term rental, and you are audited, you could be charged with fraud. Depending on the views of your city’s officials on vacation rentals, there could be fines or more serious consequences.

This is widely practiced, but in owner’s defense … it is usually not aimed at saving the tenants the cost of tax, but more to accommodate the owner’s need or desire to only take long term, or monthly rentals. Most cities do not require a vacation rental permit for properties that solely take long term rentals, but all should know, whether permitted or not … renting your property for one month to tenants staying less than what the city considers a long term stay, could come back to haunt you.

Cities have full rights to the names and contact information on each and every one of your tenants. If you are audited, as more and more cities are now doing, you could be charged with fraud and a felony. Likewise, a tenant could be charged with the same if they book your property as a long term with the intent of avoiding T.O.T.

“Whenever you go on a trip to visit foreign lands or distant places, remember that they are all someone’s home and backyard.”

This simple statement written by Vera Nazarian, in “The Perpetual Calendar of Inspiration,” immediately caught my attention and is the inspiration behind this post. Even though 99% of all vacation rental guests instinctively understand this statement on a basic level, I still feel the need to discuss this subject which I believe is typically the “elephant in the room” when it comes to the vacation rental opposition.

The vacation rental industry, as in any business, has its challenges … mainly people! Guests, owners, neighbors, government. The same challenges we have in almost every aspect of our lives. Recent airline headlines argue flyer’s personal space and the use of devices by some to obstruct seats from reclining, elected government representatives are in gridlock and refuse to compromise or even talk to each other, and there is a noted overall decline in customer service in establishments across the US … and the list goes on. It seems that people these days find it impossible to get along with other people and in the end, everyone loses!

OK … so here’s the deal with vacation rentals! People … guests, owners, neighbors and government … everyone needs to work together!

Guests

Be Informed & Be a Good Neighbor:Vacation rental guests, please be aware that your neighbors have a right to “quite enjoyment” which is protected by the law. You must make yourself aware of the local vacation rental ordinance regulations, to not only follow these laws but also to avoid costly violation fines. Not all owners are aware or forthcoming. You should check the city website and look up “vacation rental ordinance” to see if there are restrictions of which you should be aware. Example: The City of Rancho Mirage states in their ordinance that it is strictly prohibited for short term renters to use any kind of musical or sound devise outside the property … period. This pertains to rentals under 28 days and includes, music, Ipads, You Tube Videos, TV and radio broadcasts outside the home or that could be heard outside the home by leaving the windows or doors open. If a neighbor reports you … you may be fined. Vacation Rentals of the Desert informs all of our tenants of the various ordinance rules however I am not at all certain that all private owners make this information known to their guests or are even aware of the regulations themselves. Pleading ignorance of rules and regulations, whether owner or guest, will not spare you the fine.

Owners

Know Your City Requirements & Inform Your Guests:As a vacation rental owner you are managing a business. You should take responsibility for your business and know the law. It is up to you to keep yourself updated on the ordinance requirements and good neighbor laws in your vacation property’s community. You must inform the guest so neither you nor your guest suffers violation fines. You should also be aware of the “bigger picture.” Violation of city ordinance rules could result in the city prohibiting your ability to accept short term rentals or ultimately ban short term rentals throughout the city. Indian Wells, California banned short term rentals of less than seven nights as a result of two incidents over a recent “event” weekend. Two … just two complaints throughout an entire city caused this strict ban. Obviously these two incidents were the proverbial “last straw.” But think about how this could affect your vacation rental business … I do, and I chose to always look at the big picture.

Neighbors

Do You Ever Get to Pick Your Year-Round Neighbors?The truth is … I for one would rather have an occasional vacation renter than some of the neighbors I’ve had to live with 365 days a year! So you have a vacation rental next door and there are kids splashing in the pool and squealing laughter every other weekend for 6 months out of the year. Could be every day … and with a yappy dog … and skateboards every day along your street … or maybe they aren’t very attentive to their yard. What is your recourse then? Would you prefer a vacant home? Maybe throw in the occasional vagrant? How’s that yard look? You must remember … they were all over your neighborhood in 2009 and 2010. I have a next door neighbor who lives on his back patio. He’s boisterous, loud, crude and has a large following of visitors just like him. I can’t go out on my back patio and read a book … not that I want to in 110 degree heat … just sayin’.

Government

Do You Really Think Another Regulation Will Solve the Problem? Cities are at risk of driving away tourists and their income as well as potential buyers. Throughout the United States, the recent recovery of the housing industry has been largely driven by the growth in vacation rentals and the draw of rental property investments. Without these buyers, many resort cities would still be in crisis and many neighborhoods would be peppered with vacant and abandoned homes. Vacation rental guests are traditionally the future buyers of second homes in resort areas. Vacation rentals allow families to test an area before buying. For many, the ability to offset some of the overhead expenses through vacation rentals will make purchasing a second home affordable. Home purchases, contracting companies, dining and entertainment business … all of the services used by vacation property owners and renters ultimately benefit cities financially. The economic impact is substantial … especially in a resort community. Wouldn’t a more positive and productive approach be to work WITH vacation rental owners and managers? To enforce their “pro-active” responsibility in managing their vacation home, guests and ordinance violations? If the guest and/or owners are not informed of the ordinance … how does another regulation eliminate the problem?

Together we can find a way to make this work out for everyone. Some people will not care … will never care! Those are the ones that must go! Working with “good” vacation property owners and managers, enforcing the existing regulations, and working towards shutting down the “bad” vacation properties is the desire of every good owner, vacation rental management company, year-round neighbor and government official. It is the more difficult thing to do … but it is the RIGHT thing to do.